Friday, November 28, 2014

A Hounslow landlord, Ifthikar Uddin has been banned from acting as a
managing agent for any House in Multiple Occupation by Hounslow Council on the grounds that he is not a 'fit and proper' person.

The decision follows the inspection of two HMO's Ifthikar Uddin managed. The pair of rental properties were described as containing 'filthy bedsits' that were 'potential
death traps'.

The properties managed by Uddin were damp, mouldy and dangerous. They failed to meet basic fire safety requirements, had dangerous boilers, unsafe electrics, and failed to meet fire safety regulations.

One property, a four bedroom house was found to have 16 people crammed into it.

Ifthikar Uddin is not new to the courts. He was company secretary of a letting agents, Key Property (UK), on Bell Road, Hounslow which was fined £42,500 back in September 2013 following 15 housing offences.

Hounslow Council leader Steve Curran said:

"We will not tolerate rogue landlords in Hounslow. Where we have the
evidence and power we will crack down hard on these parasites who are
making profits from vulnerable people, often on sky high rents."

Rattan Singh and Balbir
Kaur admitted to 19 offences at Maidstone Magistrates’ Court after failing to comply with notices under the
Housing Act 2004.

The pair had ignored requests by Medway Council's housing team to make improvements to two rental properties they owned and managed. The Council then made a formal legal notice in December 2013, which was also ignored.

The rental properties were damp and without working heating or functioning fire alarms.

On addition to the fine, the pair have to pay £600 in court costs alongside a £150 victim surcharge.

Nationwide's House Price Index has recorded 0.3% growth during their November period.

The months slowing market brings the 12 month growth figure down half a percent to 8.5%.

The average UK property is now £189,288.

The Nationwide's Chief Economist, Robert Gardner said:

“The annual pace of house price growth continued to soften in November, falling from 9.0% in October to 8.5%, marking the third consecutive month where annual growth has moderated. This is despite house prices increasing by 0.3% month on month in November.

Housing market activity levels have remained relatively weak in recent months. The number of mortgages approved for house purchase in September was almost 20% below the level prevailing at the start of the year and 27% below the long-term average. Similarly, housing market turnover rates are well below long-term averages. For example, the number of mortgage transactions is currently equal to around 4% of the housing stock1 - well below the long-run average of 6%."

MPs will vote on Friday on a private members bill on making revenge evictions illegal.
The Bill was introduced by Liberal Democrat MP Sarah Teather who has decided to hang up her MP boots after the next general election.

It's funny that the whole revenge eviction thing has suddenly become a problem. The law and the principle that landlords can gain possession by serving a section 21 notice as of right has been in existence since the introduction of the Housing Act 1988. This means that the potential for so called revenge evictions has been around for over 25 years. Why has it suddenly become a problem? I suspect it's a much about politics and charities having a campaign to justify their existence than a significant problem within the private rental sector.

Not really. They've not crunched enough data to share anything worth knowing. It appears to be more of an SEO exercise put together by Keepmoat using some data from the Halifax house price data.

The tool lets you see the average price per square foot of bunch of regional towns/cities, next to a graphic square, that doesn't appear to reflect the actual relative area you get for your money ( another thing that needs improving).

This tool could be useful if...

To make this tool worthwhile they need to crunch a lot more data. The data needs to be street specific or else it has no useful value. As it stands, the tool tells me a square foot of average Harrogate real estate will cost me more than a similar sized chunk of Scunthorpe...well, I'm not from Yorkshire, but I'd already guessed as much.

I have no doubt that in the future, whether it'll be by Keepmoat, Zoopla, Rightmove or whoever, this type of tool will become useful as part of the way we source an area to invest in - particularly as the value of space becomes increasingly important and more data of specific property dimensions are logged.

The Government has made an additional amendment to the Consumer Rights Bill (currently at Report stage in the House of Lords). The amendment requires all lettings agents to display whether the firm offers the financial protection of being part of a Client Money Protection (CMP) Scheme.

The SAFEagent campaign has welcomed the amendment, with Chair of the SAFEagent Steering Group, John Midgley saying:

“We are delighted that the Government has made this common sense move and listened to our concerns on the need for financial protection for landlords and tenants. This is the first step in ensuring that being part of a CMP scheme is made a mandatory requirement."

As 2014 draws to a close and the festive season begins, now is a good time to reflect on the past year’s activity, then start looking and planning ahead for 2015.

For the buy-to-let mortgage market, 2014 has been a year of continued improvement building on the growth experienced in the previous year. Not only has the level of new buy-to-let lending risen this year (expected to reach around £25bn), but importantly for landlords, the number of products available in the marketplace has increased considerably.

At the beginning of 2014, Property Hawk Mortgages had around 400 buy-to-let mortgage products on its sourcing and quotation system compared with well over 600 products that are currently available. This is an increase of over 50% and clearly demonstrates the improved appetite of lenders in this sector.

The quality of buy-to-let mortgage business continues to support growth in the market as lenders assess risk in different sectors. The Council of Mortgage Lenders reported earlier this year that around 1.7% of home-owner mortgages had arrears equivalent to at least three months' mortgage payments while the proportion was around 0.9% among buy-to-let mortgages.

As competition has increased, buy-to-let rates for mainstream applications have become very keenly priced especially at 75% loan-to-value and are now closer to residential mortgage rates that ever before. Presumably this has resulted in squeezed profit margins for lenders, which may partly explain why there has been an increase in the number of lenders now offering 80% loan-to-value products at higher rates, thus returning higher margins.

Options for landlords in niche areas such as HMOs, limited companies and student lets are still mainly provided by Paragon Mortgages and Kent Reliance who cater well for professional landlords with large portfolios. However, the recent announcement of a new lender in this arena, Fleet Mortgages, is very exciting. Fleet Mortgages will be distributing its products through a very limited number of specialist brokers including Property Hawk Mortgages.

2015 will see more entrants into the buy-to-let mortgage market as a number of new lenders are currently applying for banking status. Hopefully, this will also encourage product development in the sector and perhaps further improvements in lending criteria.

In particular it would be good to see more lenders offering 85% LTV products. Many landlords like to employ higher gearing in their property investments and currently Kent Reliance is the only place to go. Recent increases to their rates and minimum loan size indicates that Kent Reliance is stemming the flow of business at the moment, perhaps as a result of too much demand.

It is widely expected that interest rates will increase at some point in 2015, although some economists are predicting later rather than earlier in the year. This will clearly impact on buy-to-let mortgage rates which are likely to increase in-line with changes to Bank of England Base Rate. However, I expect lender appetite to remain strong and competition among lenders to temper rate rises, ensuring that the buy-to-let sector remains attractive and viable for landlord clients.

The Halifax Bank are predicting house price inflation of between 3% to 5% in 2015, with the UK

seeing a more even growth across all areas and not just in London and the South East.

The banks conservative property price growth reflects the impact of the prospective BoE rate rise and the continued affordability concerns, though they remain confident that values will be supported by solid economic growth, strong employment and low mortgage rates.

In the longer term, the bank predict that the property prices will be more reflective of income growth.

“The fortunes of the housing market are closely tied to developments in the wider economy. The strengthening in the UK economy has contributed to higher housing demand over the past 18-24 months. There has been an increase in the number of buyers, fuelled by rising confidence and the improved cost and availability of credit. Higher demand, however, has not been matched by an increase in the number of sellers in the market, resulting in strong upward pressure on house prices in some parts of the UK.

The deterioration in housing affordability as a result of higher house prices, earnings growth that has been consistently below consumer price inflation until very recently and increased talk of an interest rate rise, appear to have combined to temper housing demand since the summer. Tighter mortgage rules may also have acted as a brake on activity. The weakening in housing demand has led to a modest easing in both price growth and sales.

House prices in the three months to October were 0.8% higher than in the preceding three months. This was the third consecutive decline in the quarterly rate of increase and the smallest rise since December 2012. Annual price growth in the three months to October slowed to 8.8% from 9.6% in September. Activity has also declined with mortgage approvals in September falling for the third successive month to a 14 month low, whilst home sales are at their lowest level since October 2013."

Stable economy in 2015 will support housing market

“There has been a slight easing in economic momentum during the second half of 2014, mainly reflecting global economic developments, particularly the slowdown in the euro zone. Despite slowing moderately, the pace of growth remains robust. Moreover, the UK economy has moved from a period of prolonged stagnation to growth at, or above, its long run trend over the past 18 months or so. Overall, UK economic activity is forecast to grow by around 3% in both 2014 and 2015.

“Signs that tightening conditions in the labour market are translating into stronger wage growth are now becoming apparent. Official data indicates an acceleration in regular annual pay growth to 1.3% in September from 0.9% previously, driven by a pick-up in private sector wages. Whilst wage growth remains modest, the increase has been sufficient to close the gap with the current rate of consumer price inflation (1.3%), helping to relieve some of the pressure on household finances. This trend in wage growth is expected to continue, providing the recovery with an additional boost.

Impact of interest rate rise

“The MPC’s November Inflation Report suggests the likelihood of rates remaining on hold through the first half of 2015 has risen. An emphasis on downside risks to the UK economy from the external environment, stemming mainly from the euro zone, reinforced the impression that the MPC is less likely to raise interest rates in early 2015 than appeared a few months ago. Nevertheless, with the timing of a rate rise dependent on the Committee’s assessment of the information contained in the flow of economic data, an increase as early as February cannot be ruled out, but compelling evidence of an accelerating pace of wage growth would need to build in the months ahead to trigger a rise in early 2015.

“Regardless of the precise timing of the first move in official interest rates since March 2009, the Bank of England is likely to adopt a cautious approach to raising rates initially due to concerns about the ability of many households to make higher repayments on their debts. Interest rates are, therefore, likely to rise at a gradual pace.How house prices will moderate further in 2015.

“Annual house price inflation is expected to have peaked at around 10% in July 2014. A further moderation in house price growth is likely in 2015 as supply and demand become increasingly better balanced. The prospect of higher interest rates at some point in the year and reduced affordability are expected to be key factors curbing housing demand. A looming general election next May could also raise uncertainty, resulting in a lull in activity in the early months of the year.

“Despite these downward pressures, housing demand should be supported by continuing economic recovery, growth in employment and still low mortgage rates. Average earnings also appear set to rise more quickly than inflation next year, with the first gain in ‘real’ earnings for several years stimulating demand. Overall, house prices nationally are expected to increase in a range of 3-5% in 2015.

A more even regional picture.

“House price growth in the UK during 2013 and 2014 has been very much led by London – and to a lesser extent - the rest of southern England. With mortgage affordability in London now worse than its long run average, there has been a notable cooling of buyer interest in property in the capital in the last few months. Global economic worries could also reduce demand and activity at the top end of the London market in 2015.

“Outside the South East and London, house prices do not appear markedly out of line with fundamentals. We, therefore, expect to see a more even regional pattern in house price growth during 2015.

Increased housebuilding to constrain house prices longer-term

“Further ahead, price growth is expected to be broadly in line with income growth, as steadily rising interest rates increase the affordability constraint on the market.

“Whilst levels of housebuilding remain well below those required to keep up with the pace of household formation, the latest data shows signs of a revival. A continuation of this upward trend in housebuilding would help to bring demand and supply into better balance, curbing upward pressure on house prices.

“The Financial Policy Committee announced in late June 2014 that lenders are to (i) limit mortgages with a loan-to-income ratio of 4.5 or over to 15% of their lending, and (ii) must test whether borrowers are able to afford their mortgage if the prevailing mortgage rates were to increase by three percentage points over the first five years of the loan. These measures are designed to prevent a future build-up of mortgage debt threatening financial stability and should help to constrain house price growth over the medium and longer-terms.”

Landlord immigration checks are on there way after the Immigration Bill received Royal Assent and passed into law back in August. Landlords outside the West Midlands don't need to panic yet though, as the legislation requiring landlords to make checks on their tenants will initially effect only landlords in Birmingham and the West Midlands. This will begin from the 1st of December before being rolled out across the rest of the country early next year.

The rules will require landlords to collect documentation from prospective tenants such as as passport or biometric visa. Landlords will be required to keep them for a period of 12 months after the tenancy has ended. There are all sorts of implications and landlords could face up to a £3000 fine if they fail to carry out the checks correctly.

The big problem is : ' how many landlords are used to correctly identifying the plethora of visas '.

Thankfully, some tenants will be excluded from the checks, including student tenants who have been nominated directly by colleges, local authority housing, hostels and refuges these tenants will be excluded from the checks.

The phased introduction of the scheme is likely to begin in 2015, although sceptics anticipate that this will be put on hold until after the general election in May. So landlords, don't panic and enjoy your Christmas.

Monday, November 24, 2014

The Joseph Rowntree Foundation (JRF) have reported on the increasing number of working households who now face poverty. The shift has been blamed on a unstable job market, zero hours contracts and wage stagnation.

The JRF report that young adults and workers are now more at risk of experiencing poverty than pensioners.

The JRF report deduces that - There are now as many people in poverty in the private rented sector as the social rented sector (around 4m in both). The private rented sector is increasingly insecure – the number of repossessions in the private rented sector is rising while mortgage repossessions are falling.

Friday, November 21, 2014

Owning a listed property isn't for everyone. I must say it's not something I enjoyed. When it came to making any alterations to my last house, a Derbyshire Grade 2 listed farmhouse, I was repeatedly forced to enter into agonising debate with the local conservation officer.

I say agonising because the guide lines of what was perceived allowable or appropriate, are just so flaky and open to interpretation, that it seemed to all come down to the questionable 'good taste' or 'personal whimsy' of whichever conservation officer works your patch.

It's a bit like trying to convince a Fifa Committee Member to give you their vote.

So when I moved, the one thing that I was sure about was I didn't want the bother of another listed property. Unfortunately, we were moving to Bath, the city that invented the blasted concept.

In the end I managed to find an unlisted Edwardian property that looks out on a Grade 1 listed Georgian crescent, and that suits me just fine. I'm faced with beautiful architecture, that's not my problem - perfect.

Anyway, the reason for my ramble, is I've just received a press release for the Listed Property Shows for next year.

There's a show at Olympia London on the 14th – 15th February 2015, followed by one at HIC Harrogate on the 7th & 8th March 2015.

Organised by the Listed Property Owners’ Club (LPOC) the shows will bring together specialist suppliers and consultants, along with a bunch of those whimsical Conservation Officers ready to give their various opinions on any hypothetical plans.

The UK state is sitting on enough land to build 2 million homes according to a new Savill's study.

Savill's claim that central government own enough land to build 600,000 homes, whilst the Greater London Authority could squees another 100,000 homes, local councils have enough land between them to get on with 1 million homes, whilst the NHS own land for another 300,000.

However, the Treasury has been resistant to sell off trenches of land owned by the defence or health departments, presumably seeing slow release as more financially adept.

BTL lender Aldermore reports seeing a surge in BTL mortgage enquiries following last year's pension changes. The bank has a maximum age restriction of 75

A spokesperson for the bank said -

"With the attention to the pension changes coming in next year we are finding a lot of people who are thinking of taking out a buy-to-let for the first time at the age of 70 plus – without intending to go into this space it's opened up a niche area for us."

‘We remain unconvinced that [PRS] is a worthwhile activity for us,’ he says. ‘We don’t believe that private renting is a charitable activity. Therefore, it is a commercial one, and we don’t view the returns on PRS as sufficient. Why would we want to take the profit slowly? The only reason we want the profit is to build more affordable homes.’

The first REIT (Real Estate Investment Trust) for BTL property is to be launched by Mill Residential.

Their intention is for it to become the first UK REIT specialising in mainstream residential property investment to trade on a UK stock exchange. As a REIT, investors will not pay tax on rental profits or capital gains.

REIT shares could also be held in an ISA or self-invested pension (SiPP).

There is a minimum investment of £1,000 made through online crowdfunding platform SyndicateRoom. 90% of the rental profits will be paid out to investors as dividends.

David Toplas, chief executive of Mill Group Residential, said:

“Mill Residential REIT will add further value to its portfolio through development and refurbishment, and offer its shareholders a tax efficient, affordable and, when listed, more liquid alternative to owning a self-managed, buy-to-let property."

A hassle free alternative to property investment sounds attractive, but you need to trust that they'll be making prudent and considered management decisions along the way.

Issues with the property were first raised following the visit of a Council Tax inspector. A Magistrates' warrant was served by the Council’s Housing Standards Team and Housing Enforcement Officers inspected the property to find that it was being let as an HMO. A total of sixteen adults and one child were found to be living in the end of terrace house.

The property was described as suffering from mould, dampness, a dangerous electrical installation and fire safety issues.

The defendants were each found guilty of nine offences – one offence of operating a licensable HMO without a licence and eight housing management offences, and were each ordered to pay fines of £5,000 and court costs of £1,695.

Monday, November 17, 2014

The Joseph Rowntree Foundation (JRF) predict rents will rise twice as fast as incomes, and result in increasing numbers of people in poverty. The prediction results from reduced ownership and the continuation in the under-supply of new social housing to meet demand.

The charity believes that the nation will become increasingly will dependant on housing provision from the private rented sector.

• Private rents will rise by 90%, at a rate twice that of income rises.

• The private rented sector will grow from 7.2 million today, to 10.6 million people.

• People living in social housing will fall from 8.2 million to 5.7 million by 2040.

JRF's, Chief Executive Julia Unwin, commented:

“These stark findings are a wake-up call for political leaders. After decades of failing to build enough, those in power have a responsibility to act now to build more genuinely affordable homes. Without that we are storing up trouble for the future – a price that will be paid by children starting school life this year. These high costs are bad for families, the economy and Government.

“We need a clear strategy that builds the homes we need in the right places and avoids locking low income households out of affordable homes. This is about more than frustrated aspirations of home ownership from Generation Rent: the reality facing many people is a life below the poverty line because of the extortionate cost of keeping a roof over your head. Addressing the rising cost of housing is crucial to tackling the high levels of poverty in the UK.tion now, more people will be at risk of poverty due to rising housing costs."

"A continuing decline in home ownership and social renting, together with a lack of new homes, will result in more people living in private rented homes."

The West Bromwich Building Society made a 2 percent rate rise on their BTL tracker mortgage - despite it supposed link to the Bank base rate (which has remained stuck at 0.5%).

Many of the 6,700 professional landlords affected by the rate hike back in December 2013 have been fighting cases against what they believe to be an illegal act, some individuals making complaints direct to the FOS, or a large group funding a group action fronted by Property118.com which is due to hit the courts on January 21st, 2015.

The first leg of the tie has just gone to West Brom.

Decision letters have just been sent out by the FOS, concluding that West Brom's rise was within the terms of their mortgage agreement.

The FOS has justified the decision pointing to a clause hidden deep in the mortgage agreement's small print. The clause states that West Brom could increase the mortgage rate to "reflect market conditions and to make sure its business is carried out prudently, effectively and competitively".

The FOS have concluded that West Brom had legitimate commercial reasons to raise its tracker rate by 2 percent back in December 2013.

Rightmove's latest data indicates a cooling of the property market as we enter the winter months.

As the quiet season begins, the asking prices of property coming onto the market in November was 1.7% down on October's prices. The small seasonal fall of £4,542 on the average property price of £267,127, is smaller than the usual drop at this time of year.

Miles Shipside of Rightmove commented

“Selling is more difficult than it was earlier in the year, though the mini-boom experienced by much of the country has hit the pause rather than the stop button,”

“Underlying demand remains strong but has been muted by higher prices stretching affordability at the same time as the ability to borrow more to fund those higher prices has been curtailed by tighter mortgage lending criteria.”

Saturday, November 15, 2014

One of my tenants took the dramatic step of call in the Environmental Health Officer because of the mould problem. Now this was a classic example of how to manage your tenants and their tenancy.
The first thing I knew about the tenant going to the council was when I was contacted by the Officer informing me of the visit. I could have overreacted. Got defensive given that I have told the tenants on a number of occasions that it wasn't damp but condensation. Instead I used reverse psychology. When I contacted the tenant I embraced the prospect of the visit emphasising the positives that a "fresh set of eyes" might bring to the scenario including some additional solutions.

EHO visit came & went
The visit came and went. I then received a call from a very compliant tenant who was very almost evangelical in her embrace of the fact that there were things that she could do to manage the condensation in the property and tackle the odd incident of mould.

Condensation and mould can be managed
Having
Condensation like landlording is a management issue. Landlords need guile and cunning to keep their tenants on side and get the best out of what should be a collaborative relationship between landlord and tenant.

I'm not absolutely sure, but I think this might well be the largest fine ever handed out to a private residential landlord.

An Islington landlord, David Kohali has just been ordered to pay £190,000, in fines, a confiscation order of £76,562.07 and court costs of £15,042.50 - a total sum of two hundred and eighty one thousand, six hundred and seven pounds and fifty seven pence, that's right £281,607.57.

The ginormous fine resulted from Islington Council applying for a confiscation order under the Proceeds of Crime Act. It's the first time they have used this in the case of a landlord and means that they could reclaim money obtained by illegally renting out unauthorised units.

The case follows years of Kohal ignoring council enforcement notices. The first notice was issued in 2009 regarding the rear section of a property at 201 Hornsey Road. The property had been converted by Kohali into what were described as six 'tiny' flats, despite the property only having planning consent to be used for storage.

Although the council's notices insisted Kohali should stop renting out the flats, and to take out all the bathrooms and kitchens, the landlord continued renting them out as residential. During this period Kohali lost an appeal with the Planning Inspectorate.

The Judge has given Kohali three months to pay or be faced with a custodial sentence.

The flats have now been removed from the outbuilding.

Cllr James Murray, from Islington council's housing and development, said:

"We want to make sure people have decent places to live - not places like these six small, sub-standard flats crammed into an outbuilding. The owner's decision to cram in these flats was done without planning permission, and our requests to comply with an enforcement notice were repeatedly ignored.”Take advantage of our discounted landlord insurance rates

Alongside a £2,000 fine applied to each of the eight breaches, Nathanie was ordered to pay £2,037 in prosecution costs and a £120 victim surcharge.

The issues at the HMO in Leicester came to light following a complaint of one of the seven tenants. On inspection of the property, eight breeches of HMO regulation were found, including a faulty fire alarm system, unsafe electrics and a poorly maintained fire escape.

The average rent in England and Wales now stands at a record of over £650 according to the Rentindex. This is a rise of almost 7% over the last 6 months (this includes seasonal factors). Over the year the rents now stand at 2.7% the level at this time last year which is a full 1.5% above the current inflation level of 1.2%.

The total value of rents was £44.8bn in the year to June – up 5.5 per
cent on a year ago and equivalent to nearly half the UK’s total annual
household expenditure on food.

A word of caution we are now entering a seasonal period of rent deflation as landlords fight to get a tenant in to their rental property rather than going for top dollar preferring instead to avoid the void.

This historically continues until the spring when landlords recover their nerve.

Monday, November 10, 2014

Property Hawk Mortgages has launched a new exclusive buy-to-let mortgage with Hanley Economic Building Society. The initial rate is a 3.90% two year discount (1.29% off the lender’s SVR) and it is available up to 80% LTV. There is no booking fee and no lender completion fee.

Andy Young at Property Hawk Mortgages said:

“We are delighted to launch this excellent buy-to-let exclusive with Hanley Economic. The new product, a 3.90% two year discount, is highly competitive in the 80% LTV bracket especially as it has no completion fee, which will make it very attractive to landlords.

”As the buy-to-let mortgage market has continued to expand in 2014, there is more competition among lenders. This has resulted in lower rates and higher lending levels. We continue to work closely with Hanley Economic on their buy-to-let product design, to ensure that their rates are at the forefront of the market.’

Rob Hassall, Business Development Manager at Hanley Economic Building Society, said:

“Hanley Economic is committed to providing market-leading products in the buy-to-let mortgage market by taking a targeted approach to its product design. This means looking closely at the current marketplace to ascertain the needs of landlords.

“Buy-to-let property investors often like to employ higher gearing in their property portfolios and higher LTV products can help to address this aim. In addition to this, high completion fees can be off-putting, so we are confident that this new product, with no completion fee will be popular among landlords."

The fear is, this new piece of European legislation will prevent "accidental landlords" from securing a mortgage on their second property. If a lender perceives them not to be a 'professional' landlord, they will instead, by default, be classed as a 'consumer' and therefore may will not be eligible for a Buy to let mortgage product.

The line defining who is n'accidental landlord' and who isn't is also blurred, but put simply an 'accidental landlord' is someone who has become a landlord through circumstance, usually because they have not being able to sell their residential property, and not because they purchased the property with the intention of renting it out from the offset.

Those properties that have not been occupied at any time by the borrower or a family member should definitely not be effected by the changes.

Those landlords that are classified as 'accidental' could find the new EU regulations proposed to come in this April impacting significantly on the type of lending available to them. Any loan on a second property, unlike BTL loans, could be liable to all the same financial stress tests and restrictions that are face on residential mortgages, even though the property is to be rented out to tenants.